20th June 2019

DOW-DUPONT MERGER PASSES REGULATORY HURDLE

Dow Chemical and DuPont are closer to becoming Dow-DuPont, with the European Union agreeing to their joining. In order to make the $130-billion merger happen, the two firms have agreed to sell key assets that include research and development activities.

The EU had been worried that the merger of the two biggest chemical producers would impede on incentives for herbicide and pesticide innovations. Regulators had suspended the review twice seeking more information from both companies.

However, the final decision required less divestment than some analysts had predicted. Dow has to sell two acid copolymer plants, in the US and Spain, plus a third-party contract through which it buys ionomers. DuPont must divest large portions of its pesticides business, including related research and development organizations. This unit produces herbicides and pesticides.

European Competition Commissioner Margrethe Vestager said in a statement: "Our decision today ensures that the merger between Dow and DuPont does not reduce price competition for existing pesticides or innovation for safer and better products in the future."

While the deal still needs to be approved by Brazil, China, Australia, Canada and the US, the two companies released a joint statement citing the significance of the EU win.

“This regulatory milestone," it states, "is a significant step toward closing the merger transaction, with the intention to subsequently spin into three independent publicly traded companies."

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